News Links: Toronto Condo Bubble Risk Topping New York

Toronto has more skyscrapers and high-rises under construction than any North American city — almost three times as many as New York — stoking debate on whether the condominium market in Canada’s largest city is headed for a U.S.-style correction as prices rise and household borrowing hits a record. Canadian lenders including Toronto-Dominion Bank last week raised mortgage rates to cool off the housing market.

Former Fed Chairman Paul Volcker is expected to fire back at critics of a proposed ban on proprietary trading by banks, arguing in a comment letter that the rule would make the U.S. financial system safer.

One of the problems with the gold standard is that when the real value of gold changes (as it does all the time) and the dollar price of an ounce of gold is fixed (as it must be by definition under a gold standard), that means dollar prices have to adjust in response to anything that happens to the gold market. With the economic and financial turbulence of the late 1920s and early 1930s, there was a big increase in the relative price of gold.

The external damage caused by a Greek euro area exit (or ‘Grexit’, as we call it) could, given appropriate policy response from the ECB and euro area creditor countries, be limited and need not trigger waves of "exit fear contagion" to other fiscally weak peripheral countries. The second LTRO on February 29 may buy more time but until the fundamental drivers of the euro area sovereign debt and banking crises are addressed, volatility will remain a constant companion and recovery and growth absent friends.

In a hoarding household, children learn an unhealthy attachment to things as being irreplaceable markers of emotion, identity and memory. Things suddenly become unreasonably real and unbelievably personal- a pair of shoes that have been outgrown and unusable become embedded with attachment and warm memories. The child begins to associate the events and feelings experienced with the item as the item and parting with even a broken, dirty or unusable item feels like a betrayal of what it represents. Emotions like guilt, loss, regret are entangled with the item itself.

deferring infrastructure investments is another form of kicking. Like most Kicking efforts, it will end badly sooner or later. I’m looking at a potential example as I write. One of NYC’s reservoirs is about a half mile away. A $60mm NYC/NYS funded construction plan was shelved a month ago. Could this become one of those examples where Kicking goes badly? Consider this daisy-chain.

Arthur Livingston, of Prosperity, S.C., may feel prosperous and alive, but his credit report says, "File not scored because subject is deceased." That’s because Livingston’s bank, Bank of America, has been reporting him as deceased to the three major credit agencies since May 2009, he said.

The problem is that so much of Greece’s debt has left the private sector. The European Central Bank owns a substantial portion of the bonds-and so far has insisted that it will not accept anything less than full payment at maturity.

The fundamentals for the global economy remain dire. The west is mired in debt troubles, declining competitiveness, and unsustainable social overheads. The east is struggling to build up robust consumer demand to balance its manufacturing prowess. So far the world’s leaders have used liquidity and fiscal measures to prop up demand on the margin, without addressing structural problems. The global leaders continue to treat the global economy as a car with a drained battery rather than a bad engine.

while I am very sympathetic to the plight of savers, Bullard does not consider that the Fed is merely following the lead of the economy. Another way to think about the situation is that the supply of savings and the demand for investment currently would clear only at a negative interest rate – see Paul Krugman here. Also note the excess of private saving over private investment, which is exactly what you would expect if the market clearing interest rate was below the zero bound

Some say it would be better to force Greece out of the eurozone right now, and use the funds to save Portugal. I disagree. I personally believe it would be best to recognise the desolate state of both countries, let both default inside the monetary union, and then use a sufficiently increased rescue fund to help them to rebuild themselves, and to ringfence the rest at the same time. This will be very expensive. But to ignore reality for another two years will be ruinous.

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.